Covered In Chocolate
The leading contract from the Momentum-5
List, cocoa
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PowerRating), demonstrated exceptional resiliency and a
capability to make a strong comeback after a parabolic run–a sign of
strength–after funds covered short positions.
Friday’s Commitments
of Traders Report showed there were still a large number of funds short cocoa,
despite a rally that has taken the March contract for a heady, 200-point gain.
Cocoa rallied 73 points off its gap-down low level and provided an Off The Blocks
entry after consolidating and rallying above the last hour of Friday’s high.
Coffee also revved up in the softs after the Commitments
of Traders Report highlighted that funds were still short a
large number of contracts. Two countries from the Association of Coffee
Producing Countries, a group that tries to hash out production quotas, provided
details of plans that would limit coffee output. Brazil also said it scaled back
its estimates for the 2000-2001 crop. March coffee
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PowerRating) closed
2.95 higher at 71.25.
The steepening of the yield curve reflected the market’s
expectations that the Federal Reserve is likely to slash short-term interest
rates. Higher short-term interest rates inspire traders to bid up prices on the
short end of the yield curve while the long end falls. Debt futures prices have
an inverse relationship to yields. T-bills
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PowerRating) rose slightly, adding
.010 to 95.290, while the longer maturing
T-bonds
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losses, falling 17/32 and 11/32, respectively.
The February federal funds futures
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94.470 implies the market believes there is a 94% chance the Fed will cut rates
50 basis points at its next week.
Japanese yen
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PowerRating) followed through Friday’s gains made after Bank of
Japan Governor Masaru Hayami said that the yen was too weak. A weaker leading indicators report also worked to
change perceptions about the dollar-yen relationship and traders who thought the
yen has dropped too fast covered shorts. The yen closed .0050 higher at .8656.
March dollar index futures
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PowerRating) fell .44 to 110.21.
Pork bellies
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storage report, but then gave back gains to end flat.
Slightly higher export figures bolstered beans.
March soybeans
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gained .1600 to 14.6500, and
soymeal
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